Private healthcare standoff: 6.6 Million Australians face higher costs or limited access
More than six million Australians may face significant disruptions to their private healthcare access after Healthscope, the country’s second-largest private hospital operator, announced it would terminate contracts with two major health insurance groups – Bupa and the Australian Health Services Alliance (AHSA). The decision comes amid an escalating dispute over sustainable hospital funding and rising healthcare costs.
The article also provides a lists of hospitals being impacted and insurance fund members under AHSA.
Why did Healthscope end these contracts?
Healthscope CEO Greg Horan explained that the termination was driven by the insurers’ refusal to adjust funding to meet the rising costs of hospital care. The private hospital sector has been under immense financial strain, with rising operational costs outpacing reimbursement rates from insurers.
“We are committed to providing the best care for our patients,” Horan said. “But without fair funding, hospitals cannot remain viable or attract investment.”
Earlier, Healthscope proposed a hospital facility fee to bridge the gap between rising costs and insurance payouts. However, both Bupa and AHSA opposed the fee, threatening legal action. In response, Healthscope opted to terminate its agreements, effective February 20, 2025, for Bupa, and March 4, 2025, for AHSA funds.
Who will be affected?
The decision impacts customers of both Bupa, which has 4.1 million members, and AHSA, which represents over 2.5 million policyholders across 26 smaller health funds. These include:
- Bupa members: All 4.1 million policyholders.
- AHSA-affiliated funds (representing 2.5 million members):
- Major insurers: Australian Unity, GMHBA, HBF, Westfund.
- Industry-specific funds: Teachers Health, Nurses & Midwives Health, Police Health, Defence Health.
- Other regional or specialised funds: Latrobe Health, St. Luke’s Health, Phoenix Health, and others.
Healthscope’s role in Australian healthcare
Healthscope operates major hospitals nationwide, including Norwest Private Hospital in Sydney, Knox Private Hospital in Melbourne, and Nepean Private Hospital in New South Wales. Collectively, Healthscope facilities care for over 650,000 patients annually, making the fallout from this decision wide-reaching.
The standoff is exacerbated by what Horan described as a “viability crisis” in Australia’s private hospital sector, where rising costs and underfunding have led to the closure of over 70 private hospitals in the past five years.
“In an environment of rising costs and private hospital closures, it is unacceptable for insurers to fail their core purpose – funding the care of their members, particularly those like Bupa who are boasting of record profits,” Mr Horan said.
Insurers and critics respond
Bupa and AHSA have pushed back against Healthscope’s claims, accusing the hospital operator of prioritizing investor profits over patient care. AHSA CEO Andrew Sando described Healthscope’s actions as “gouging” and stated that patients would still have access to other hospitals within AHSA’s network of 500 private facilities.
The broader healthcare landscape also reveals challenges for insurers, who argue that meeting above-inflation funding demands would force them to raise premiums, risking policy downgrades or cancellations by members.
Health insurers fighting ‘aggressive’ action from Healthscope
Rising healthcare costs across Australia
The Australian Bureau of Statistics reported a 6.7% rise in medical and hospital service costs in the last year alone, further compounding financial pressure on both hospitals and insurers. A recent government review highlighted that profit margins for private hospitals have halved over the past five years, underscoring the economic challenges faced by the sector.
What’s next for policyholders?
Policyholders with affected funds face three primary options:
- Pay out-of-pocket fees: Continue using Healthscope hospitals but cover additional costs directly.
- Switch insurers: Transition to a fund that retains agreements with Healthscope.
- Seek alternative hospitals: Opt for treatments at other private hospitals within their insurer’s network.
Implications for Over 60s
For Australians over 60, who often rely on private healthcare for elective surgeries, ongoing treatments, and shorter wait times, this development could significantly disrupt care plans. The financial burden of higher out-of-pocket costs or the logistical challenges of changing providers may disproportionately impact this demographic.
Looking forward
As February and March deadlines loom, patients are encouraged to consult their healthcare providers and insurers to understand how this decision will affect them. For many Australians, this situation underscores the urgent need for systemic reform in funding and managing private healthcare.
Whether these negotiations result in a resolution or permanent contract terminations, the ripple effects will shape the future of private healthcare access for millions across the country.
Healthscope operates 40 hospitals and clinics across Australia
Here is a full list of the affected facilities:
New South Wales
Hunter Valley Private Hospital
Lady Davidson Private Hospital
Nepean Private Hospital
Newcastle Private Hospital
Northern Beaches Hospital
Norwest Private Hospital
Prince of Wales Private Hospital
Sydney Southwest Private Hospital
The Hills Private Hospital
The Sydney Clinic
Tweed Day Surgery
Windsor Road Private Clinic
Queensland
Gold Coast Private Hospital
Peninsula Private Hospital
Pine Rivers Private Hospital
Sunnybank Private Hospital
Australian Capital Territory
Tasmania
Victoria
Holmesglen Private Hospital
John Fawkner Private Hospital
La Trobe Private Hospital
Knox Private Hospital
Melbourne Private Hospital
North Eastern Rehabilitation Centre
Northpark Private Hospital
Rehab at Home
Ringwood Private Hospital
The Geelong Clinic
The Melbourne Clinic
The Victoria Clinic
The Victorian Rehabilitation Centre
South Australia
Flinders Private Hospital
Griffith Rehabilitation Hospital
The Memorial Hospital
Western Australia
Northern Territory
Private health funds set to lose Healthscope contract:
Bupa
HCI
AIA Health Insurance
Australian Unity
GMHBA
HBF Health (including see-u)
CBHS Health and Corporate Health funds
Health Insurance Fund of Australia (HIF)
Health Partners
Defence Health
Navy Health
Teachers Health Fund
Nurses & Midwives Health
Doctors Health Fund
Emergency Services Health
Frank Health Insurance
Latrobe Health Services
Onemedifund
Peoplecare Health Insurance
Phoenix Health Fund
Police Health Limited
ACA Health Benefits Fund
Queensland Country Health Fund
Reserve Bank Health Society
Territory Health Fund
TUH
UniHealth Insurance
Union Health
Westfund
Read more articles on Health & Wellbeing here